Index Update: The Australian sharemarket edged lower on the second-to-last trading session of the year, giving up early gains as a broad sell-off in mining stocks linked to weaker commodity prices offset strength in energy shares. The S&P/ASX 200 slipped 8.60 points on Tuesday to close at 8,717.10, extending its five-day decline to 0.89% and leaving the benchmark 4.37% below its 52-week high. Despite the softer index finish, six of the 11 sectors ended in positive territory, led by energy, which rose 0.79% to recover part of its recent losses, though the sector remains down 0.27% over the past five sessions.

Macro Update: According to multiple media reports, economists are increasingly pointing to the tax cuts outlined in former President Donald Trump’s “One Big Beautiful Bill” as a major influence on the trajectory of the U.S. economy in 2026, affecting both consumers and businesses. For individuals, proposed changes to tax rates and deductions are expected to support household finances early in the year, with updated withholding rules likely to raise take-home pay and the tax filing season potentially delivering larger refunds.

Top Market Movers: Australian equities recorded mixed moves, with Netwealth Group Limited (ASX:NWL) leading gainers, rising 2.066% to AUD 25.690, followed by Temple & Webster Group Ltd (ASX:TPW), up 1.851% to AUD 13.750, and Mirvac Group (ASX:MGR), which added 1.829% to AUD 2.060. On the downside, Silex Systems Limited (ASX:SLX) fell 4.920% to AUD 8.310, Liontown Limited (ASX:LTR) slipped 4.777% to AUD 1.595, while Newmont Corporation (ASX:NEM) declined 4.084% to AUD 149.150.

Commodity Update: The U.S. dollar traded steady on Tuesday ahead of the Federal Reserve’s December minutes, expected to highlight policy divergences for 2026. Holiday-thinned liquidity kept currencies calm. Gold rose 0.70% to USD 4,374.05, silver gained 4.43% to USD 73.582, and copper advanced 2.24% to USD 12,484.82. Brent crude eased 0.10% to USD 61.43 despite lingering Russia–Ukraine supply concerns.

Our Stance: The Australian sharemarket’s modest pullback reflects year-end caution rather than a decisive shift in sentiment, with weakness in mining stocks masking underlying resilience across several sectors. Energy’s rebound highlights selective risk appetite as investors respond to stabilising oil prices, even as broader commodities remain volatile. Globally, attention is turning to U.S. fiscal policy, where proposed tax cuts could provide near-term support to consumption but also raise questions around inflation and policy settings beyond 2026. Commodity markets signal mixed signals, with precious metals firming amid uncertainty while crude softens. Overall, markets appear to be entering the new year in a consolidative phase, favouring selective sector exposure over broad-based risk-taking.

In its latest session, the S&P/ASX 200 Index declined 8.60 points, forming a small bearish candlestick on rising trading volume—a combination that signals increasing investor caution and reinforces the prevailing short-term bearish tone. On the daily chart, the index continues to trade below its 50-period Simple Moving Average (SMA), which remains a key zone of immediate resistance. Immediate support is located near the 8,630 level, and holding above this area will be critical for stabilising recent price action and restoring near-term confidence. From a broader weekly perspective, however, the index continues to trade above its 50-period SMA, a constructive long-term signal that suggests the potential for renewed upside momentum once short-term selling pressure begins to ease.